Having been dropping like a stone thanks to the global economic crisis, Dubai property prices have finally risen again, according to real estate consultancy Colliers International – by 7% in the third quarter. This is the first rise since the emirate’s property market crashed at the end of 2008. Investors who bought during the boom will not be dancing in the streets just yet, though, as this rise still leaves prices around 50% down on their pre-crash level.
Prices over the whole of 2009 are still 47% lower than that peak level, and are actually now the same as they were in the second quarter of 2007.
Colliers International’s quarterly price index collates mortgage transactions on properties open to foreign ownership, and it showed that prices between July and September 2009 rose by 7% from the second quarter, from their peak level which was enjoyed in the third quarter of 2008. This 7% increase coincides with a rise of 64% in property transactions during the third quarter, which shows that some confidence is returning to the market, and perhaps that investors and buyers are making sure they act now before the market recovers even further.
Colliers International regional director in Dubai, Ian Albert, sounds a note of warning, however, describing this third quarter rise as a “bounce” and advising that people wait for fourth quarter results before deciding that an upward trend may be happening, and that a recovery is truly in progress.
The figure of 7% equates to an increase from 949 United Arab Emirates dirhams per square foot in the second quarter to 1,016 dirhams ($278) in the third quarter. Broken down a little, the 7% rise is made up of a 6% increase in the price of apartments, a 9% increase in the price of villas, and a 7% increase in the price of townhouses.
Colliers put the rise in prices down to a more widespread availability of mortgage financing, and a belief amongst the expatriate community of workers in Dubai that job security is improving. The consultancy firm thought that the effect of new units coming onto the market in 2010 may serve to keep any further rises to a minimum, as supply will continue to outstrip demand. Many construction projects were put on hold, but as the economy slowly improves these will resume and new properties will become ready for sale. Colliers’ Ian Albert added that “certain tier one developments will offer investors oases of performance, predicated upon a return to fundamentals outlook”.